Shell escapes severe restrictions: court overturns decision to cut emissions by 45%

A Dutch appeals court has ruled that Shell is not obliged to drastically cut its carbon emissions by 2030, dealing a blow to efforts by environmental activists to curb climate change pollution. The ruling, which came during the COP29 climate summit in Baku, overturned a previous ruling obliging the British oil giant to drastically cut carbon emissions.

Shell $SHEL expressed satisfaction with the court's decision, which Shell CEO Wael Sawan said was the right step for the global energy transition, the Netherlands and the company itself. The previous 2021 ruling ordered Shell to reduce its carbon dioxide emissions by 45% by 2030 from 2019 levels. This requirement included not only emissions from Shell's own operations, but also emissions from products the company sells.

The Court of Appeals in The Hague recognized that Shell has an obligation to limit its carbon dioxide emissions to protect the planet from dangerous climate change. However, it said there was no clear scientific consensus on the specific percentage of reductions that each company should apply, and therefore overturned the original judgment.

According to the court, Shell is already working to reduce emissions from its own operations (scope 1 and 2 emissions). However, it would not be effective to order a company to reduce so-called scope 3 emissions, which arise from the use of its products. According to Shell itself, such a measure would not reduce customer demand for products such as gasoline, diesel or natural gas that are needed to run homes and businesses.

The environmental organisation Friends of the Earth Netherlands, which brought the case against Shell, expressed disappointment at the court's decision. "It hurts," said Donald Pols, the organisation's director. However, Pols also highlighted some positive points from the ruling, such as the confirmation of corporate responsibility for human rights violations related to climate change. "The court also found that Shell's more than 800 fossil fuel projects violated the company's responsibility to uphold human rights principles," Pols said. Friends of the Earth is now considering an appeal to the Supreme Court of the Netherlands.

Shell's successful appeal sends a signal to other polluters that they are not yet threatened by obligations under international frameworks such as the Paris Agreement, which commits countries to significantly reduce carbon dioxide emissions. Citing the need to ensure stable and affordable energy, Shell recently lowered its climate targets, announcing that it would reduce the so-called net carbon intensity of its products by 15-20% by 2030, down from the 20% originally planned for 2016. The target to halve the net carbon intensity by 2035 has been scrapped altogether.

Shell is also investing significantly more in fossil fuels than in clean energy. Last year, the company invested $5.6 billion in low-carbon energy, which accounted for only 23% of its total investment. In comparison, it invested over $16 billion in its oil and gas business.

According to Friends of the Earth, Shell is responsible for about 3% of global greenhouse gas emissions, more than the emissions of individual countries. Pols said international climate agreements will be ineffective in fighting climate change if large corporations like Shell remain excluded. He recalled that since 2015, when the Paris Agreement was signed, the 50 largest companies have emitted 80% of global CO2 emissions.

Mark van Baal, founder of Follow This, an organisation that seeks to push for emissions reductions at energy company AGMs through shareholder votes, said the court ruling increases investor accountability for "oil industry reform". He described the court's decision as "a step backwards in the fight against the climate crisis".

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Source: CNN